Tax refund tips: How to make your money work for you

(InvestigateTV) — For those expecting a tax refund this year, a personal finance coach said having a plan before the money arrives can help avoid costly mistakes.

Cherry Dale, vice president of financial education at Virginia Credit Union, said the first step is simple: wait.

“It’s exciting to get a tax refund and I would say take that tax refund and sock it away into a savings account just for at least a week and that can help you avoid any impulse purchases,” Dale said. “So, take a minute sit down and think through what your goals are.”

Dale said refund recipients should look at their budget and decide how to use the extra cash — whether that means paying down debt, saving for a home down payment, or getting ahead on bills.

“Do you have an emergency fund? Sometimes it’s not fun to sock that tax money away for an emergency fund, but I guarantee, if your car breaks down or your HVAC system breaks, you’re going to love that you have a cushion to pull from an emergency fund,” Dale said.

Dale recommends putting at least one-third of any tax refund into a savings account.

She said it is also acceptable to use a portion for a large purchase, a vehicle, or a vacation fund — as long as the decision is considered.